Technical amendments already announced and superannuation changes that formed part of the Government’s housing affordability measures were the key superannuation measures in the 2017-18 Budget. This will be a relief for SMSF trustees, with many of them still working through last year’s Budget changes to superannuation which take effect on 1 July 2017.
The Government is increasing its revenue take through two significant taxation changes – increasing the Medicare Levy to 2.5% from 1 July 2018 and a levy on major banks. Together these two revenue measures bring in $14.4 billion in revenue over the forward estimate periods, with the Government allocating the $8.2 billion from the Medicare Levy increases to funding the National Disability Insurance Scheme.
The revenue measures are complimented by major savings in higher education, better targeting of assistance to families and jobseekers and improving access to cheaper medicines.
On the expense side of the Budget, the Government have committed to major spending on school funding, a Skilling Australians Fund supporting ongoing jobs training, new medicine listings on the Pharmaceutical Benefits Scheme, supporting the Medicare scheme and extending the immediate deducibility rules for small businesses.
As expected, housing affordability is a centrepiece of the 2017-18 Budget, with a raft of measures introduced to improve affordability. However, while some tax deductions related to housing investment have been trimmed, negative gearing and the capital gains tax discount have gone largely untouched.
The Budget has Australia with an estimated deficit of $29.4 billion (1.6% of GDP) in 2017-18. A $7.4 billion (0.4% of GDP) surplus is predicted in 2020-21 – continuing the recent tradition of Government’s forecasting a return to surplus in the last year of the Budget’s forecasting period. The return to surplus is forecasted on an increase of growth to 3 per cent in 2018-19 forwards.